EAST WEST Banking Corp. (EastWest Bank) raised some P2.7 billion from its first offering of peso-denominated long-term negotiable certificates of time deposits (LTNCDs).
During the ceremonial listing of the deposit instruments on Tuesday at the Philippine Dealing System in Makati City, the Gotianun-led bank said it issued P2.7-billion worth of LTNCDs from its approved P10-billion issuance following a public offer conducted last March 6-10.
The LTNCDs have a 5.5 year tenor and will mature on Sept. 21, 2022. The papers carried a coupon rate of 4%.
LTNCDs, like the regular time deposits, offer higher interest rates. Unlike time deposits, however, LTNCDs cannot be pre-terminated. They are called "negotiable" because they can be sold at the secondary market.
The Bangko Sentral ng Pilipinas approved last Jan. 12 EastWest Bank's P10-billion fund-raising program.
Unicapital, Inc. acted as the offer's arranger and selling agent.
EastWest Bank President and Chief Executive Officer Antonio C. Moncupa, Jr. said funds raised from the LTNCD offering will be used to manage the bank's funding structure.
"This one is to manage the funding structure for the bank especially for EastWest because we're heavy on consumer, our consumer are mostly long-term," he told reporters yesterday prior to the ceremonial listing.
Asked when the bank plans to issue the remainder of its approved LTNCD program, Mr. Moncupa said EastWest Bank will auction off the whole P10 billion within the year.
"So maybe within the month, next month, it's flexible. But what we're after is we issue all the approvals that's been given [because] the bank is growing very fast," he said.
Meanwhile, the bank's chief mentioned during his speech that EastWest Bank also plans to issue Tier 2 notes. "We're exploring all options so that we could put necessary ingredients to make EastWest the most significant player in the industry," he said.
Sought for clarification, Mr. Moncupa told reporters after the event: "We are just keeping our options open... Those things are possibilities all banks should explore."
"We expect to grow fast... We have lots of people in stores taking deposits. We have a whole organization of consumer people, business lending...and that would need capital to optimize -- that is why we are looking at Tier 2. Although now it is less important because mataas ang requirement natin sa (we have a high requirement for) CET1 (common equity Tier 1) [in] Basel III," he added.
Introduced as part of Basel III reforms in the wake of the global financial crisis, CET1 measures the core capital of a bank, as it includes common shares and retained earnings. The BSP requires banks to keep a CET1 ratio of 8.5%.
EastWest Bank saw its bottom line surge by 70% last year to reach P3.4 billion compared to the P2 billion profit it recorded in 2015.
Shares in EastWest Bank lost 10 centavos or 0.49% to close at P20.35 apiece on Tuesday. --
Janine Marie D. Soliman
Published in BusinessWorld
Issue Date: March 22, 2017